Multiples (company valuation)

Multiple is used to describe any process in which a company is valued by a multiple of a reference value (here profit).

If a company is to be continued, its value is to be understood as the present value of the sums of money that will either flow directly to the owners (e.g. as dividends) or could flow (such as retained profits) and express themselves as growth.

Basically, it depends on the future "profits". Let the profit be denoted by G. In addition, zero growth is assumed. The enterprise value is a multiple m of the profit G, because the formula for the present value of an infinite annuity says that the present value is equal to the quotient of the pension amount and the discount rate. The multiplier or multiple to use the term borrowed from Anglo-Saxon is equal to the reciprocal of the rate k to be used for discounting.

Aus heutiger Sicht würde der Diskontsatz in Höhe einer Rendite angesetzt werden, die bei alternativen Anlagen vergleichbaren Risikos erwartet werden kann. Das können beispielsweise 10% oder 12% sein. In diesem Sinne darf k als Cost of capital bezeichnet werden.
Similarly, the present value of a series of geometrically growing “payments” results as a multiple of the amount of the next payment. Only this time the multiple is equal to the reciprocal of the difference between the cost of capital and the growth rate.
Practitioners do not determine the multiple using the cost of capital or the cost of capital and growth rates. You determine the multiple directly and quite empirically as a variable that can be observed in the market. Indeed, because value = multiple * profit, the multiple is equal to the quotient of value and profit. Practitioners now turn to comparison companies and ask what relation between value and profit that is nothing other than the price-earnings ratio they are traded on the stock exchange. The multiple obtained from industry comparisons is then “adjusted” for special factors if necessary. This saves the discussion of the cost of capital. This procedure is called the comparable company procedure.

Die Vorgehensweise hat Schule gemacht, und es wurden Varianten vorgeschlagen, den Wert einer Unternehmung zu bestimmen, indem unterschiedliche Bezugsgrößen mit einem „marktüblichen“ Multiple vervielfacht werden. So wird beispielsweise der Cash flow ermittelt und mit einem speziellen Multiple, das den Relationen zwischen Wert und Cashflow bei Vergleichsunternehmen entspricht, multipliziert. Es gibt auch Multiples, mit denen der Umsatz multipliziert wird. Das ist besonders bei Handelsunternehmen gebräuchliche Praxis.

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